Zero Spread WorldSpreads

[capitalspreads]

Forgive me for sounding stupid but with a min spread of 0.5 but often 1.0 plus 0.2 aside per side this makes for a round trip of 0.9 to 1.4

Capital spreads is fixed at 1 ........ 24 hrs a day

Simon

 

[alphadude]

Forgive me for sounding stupid but with a min spread of 0.5 but often 1.0 plus 0.2 aside per side this makes for a round trip of 0.9 to 1.4

Capital spreads is fixed at 1 ........ 24 hrs a day

Simon

if capital spreads is fixed at 1; then the round trip is 1+1 = 2 pips per position.

IB is (0.5 + 0.2) * 2 = 1.4. so IB is better.

moreover; you cannot compare spread betting companies to real brokers. Spread Betting companies are your counter party; so they have conflict of interest. They are the horse and the bookie at the same time. this means you will get dealer referrals (aka requotes in MT4) or delays in execution if you become a profitable punter.

I have been trading with IB for more than 2 years now; I never ever get a market order rejected for any reason whatsoever. also; what I see on the quote screen is what I get.

 

[twinj]

Hi alphadude,
thanks for your info. I am intrigued that you get the price you see and also no requotes. I thought this would be very unlikely if IB is straight through processing? Since there is a finite time it takes for your market order to reach their banks that are quoting the prices.

Thanks in advance.

 

[capitalspreads]

i am sorry to have to correct you but........ a round trip on a fixed price of 1 pip costs errr 1 pip !

you always must look at a trade as if you make buy and sell but the quote does not move. So if you buy at 1.30453-1.30463 in the Eur/Usd and then sell on the same quote a second later the cost will be one pip.

on a commission based market you will pay on both legs so the 'cost' is doubled around the spread. possibly to be more accurate i should have said CFD Trading | CFDs | Contract for Difference | Capital CFDs rather than capitalspreads.

I really do have to laugh sometimes at the preconceptions here. There is always someone on the other side of your deal whether with IB or FXCM. At Capitalcfds we take 16 FX liquidity providers (the sixteen biggest) average it to a 1 pip spread and just put the price out to clients. The idea that cfd providers manipulate prices is just fanciful.

i have two traders looking after 3000 markets taking over 30k trades a day. They are just not interested in over 99pc of trades/traders. all they look at is the position risk of the company. in reality the trades they look at are they large ones (i.e £1,000,000 value and over in FX). bear in mind the cfd/sb platform is for small retail clients not pros (for whom we have several bespoke FX platforms tailored to taste!)

simon

 

[alphadude]

i am sorry to have to correct you but........ a round trip on a fixed price of 1 pip costs errr 1 pip !

you always must look at a trade as if you make buy and sell but the quote does not move. So if you buy at 1.30453-1.30463 in the Eur/Usd and then sell on the same quote a second later the cost will be one pip.

on a commission based market you will pay on both legs so the 'cost' is doubled around the spread. possibly to be more accurate i should have said CFD Trading | CFDs | Contract for Difference | Capital CFDs rather than capitalspreads.

I really do have to laugh sometimes at the preconceptions here. There is always someone on the other side of your deal whether with IB or FXCM. At Capitalcfds we take 16 FX liquidity providers (the sixteen biggest) average it to a 1 pip spread and just put the price out to clients. The idea that cfd providers manipulate prices is just fanciful.

i have two traders looking after 3000 markets taking over 30k trades a day. They are just not interested in over 99pc of trades/traders. all they look at is the position risk of the company. in reality the trades they look at are they large ones (i.e £1,000,000 value and over in FX). bear in mind the cfd/sb platform is for small retail clients not pros (for whom we have several bespoke FX platforms tailored to taste!)

simon

hi simon,

the round trip calculation i used is;
- buy @ market by crossing the spread (1 pip)
- sell @ market by crossing the spread again (1 pip)

so the total round trip cost for capital spreads: 2 pips.

same thing with IB:
- buy @ market by crossing the spread (0.5 pip) + 0.2 pip commission
- sell @ market by crossing the spread again (0.5 pip) + 0.2 pip commission

total round trip cost for IB: 1.4 pips

this is how the trading cost is calculated; by assuming we trade at market round trip.

 

[alphadude]

Hi alphadude,
thanks for your info. I am intrigued that you get the price you see and also no requotes. I thought this would be very unlikely if IB is straight through processing? Since there is a finite time it takes for your market order to reach their banks that are quoting the prices.

Thanks in advance.

slippage do occur on IB of course; because of the finite time the market order will take to get there.

however; the slippage I get is very minimal; and negligible; as it averages to 0.0

i keep track of the slippage; by saving the bid/ask prices when I place my market order. Then I calculate the slippage as following:
- for a buy order: trade price - ask price
- for a sell order: trade price - bid price

the concept of dealer referral and/or requotes; does not exists in IB.

btw; i worked for two brokers for more than 10 years; and I specialized in order management systems; direct market access, and algo trading. so I know what am talking about.

 

[capitalspreads]

alphadude

you cannot charge the 'spread' twice . the spread is just that 'the spread' when you trade in to a position you 'pay' the spread but that is now in the deal . so when you trade out you are effectively doing it at zero spread.

a good way of looking at it would be to imagine that capitalcfds was quoting zero spread but charging 0.5 pips on each leg. In this way you would end up with the same final situation. 1 pip spread

i think you are mistaking 'half the spread' on each leg of the trade

simon

 

[Ross Spur]

alphadude

you cannot charge the 'spread' twice . the spread is just that 'the spread' when you trade in to a position you 'pay' the spread but that is now in the deal . so when you trade out you are effectively doing it at zero spread.

a good way of looking at it would be to imagine that capitalcfds was quoting zero spread but charging 0.5 pips on each leg. In this way you would end up with the same final situation. 1 pip spread

i think you are mistaking 'half the spread' on each leg of the trade

simon

Eh? I've been SB-ing for ten years and thought I had the basics sussed, but now I'm confused. You seem to be arguing about two different things.

 

[capitalspreads]

ross

just trying to clear up a comment which seemed to be saying that if we quote 1 point wide somehow this translates into 2 points when you trade in and out.

alphadude is arguing that because u trade on a 1 point wide price in and a 1 point wide price going out this means that you pay 2 points overall !!

just trying to explain that this is not the case. The only time you pay on both sides of a round trip is when there is commission involved per trade.

cheers
simon

 

[alphadude]

ross

just trying to clear up a comment which seemed to be saying that if we quote 1 point wide somehow this translates into 2 points when you trade in and out.

alphadude is arguing that because u trade on a 1 point wide price in and a 1 point wide price going out this means that you pay 2 points overall !!

just trying to explain that this is not the case. The only time you pay on both sides of a round trip is when there is commission involved per trade.

cheers
simon

hi Simon,

same as Ross; i probably don't know how the deal works with Capital Spreads.

could you illustrate how a typical trade on EUR/USD works?

thanks.

 

[Ross Spur]

hi Simon,

same as Ross; i probably don't know how the deal works with Capital Spreads.

could you illustrate how a typical trade on EUR/USD works?

thanks.

Alphadude: I hope I know by now how the deal works with SB. In this case I think you're getting confused, as Simon says.

Say you sell at 100 when the SB quote is 100/101, then change your mind and immediately close at 101. You lose 1pt, which is the total cost of the round trip. You're not paying 'commission' twice. Simples!

PS. Don't want to sound like a Capital Spreads ad, but I have to say that a fixed 1pt spread on EU is a very good deal and in most circumstances better than you'd get with a broker like IB.

 

[alphadude]

Alphadude: I hope I know by now how the deal works with SB. In this case I think you're getting confused, as Simon says.

Say you sell at 100 when the SB quote is 100/101, then change your mind and immediately close at 101. You lose 1pt, which is the total cost of the round trip. You're not paying 'commission' twice. Simples!

PS. Don't want to sound like a Capital Spreads ad, but I have to say that a fixed 1pt spread on EU is a very good deal and in most circumstances better than you'd get with a broker like IB.

got it; perhaps i will open an CS account one day

Simon; do you offer demo accounts?

 

[capitalspreads]

Alphadude

for the purposes of this example we have to assume that the markets are absolutely static and no movement is occurring.

Let us assume that capitalcfds is quoting the EUR/USD at 1.31255 - 1.31265 (our 24hr spread of 1 pip)

and IB is quoting 1.31257 - 1.31262 (their narrowest spread of 0.5 pip)

in both cases you buy and sell €1,000,000 on the quoted price.

with capitalcfds you will have made a trade loss of $100

with IB you will have made a trade loss of $50 but will have incurred two sets of $20 comms. so the cost to your account is $90

with IB narrowest spread (of 0.5 pips) you will do better than with capitalcfds but on anything wider than 0.6 you will do better with capitalcfds.

to be honest there is not much in it!

but if you were to open a SB capitalspreads account and were a profitable trader you get the same spreads etc as with capital cfds but the revenue you earned would be tax free. (currently)

BUT to get this benefit you have to win!! which is always easier said than done

simon

 

[Ross Spur]

BUT to get this benefit you have to win!! which is always easier said than done

simon

Pah! I knew there would have to be a catch somewhere.

 

[Paulds11]

the proof it was a ponzi



I CHALLENGE ANYONE TO SAY THAT THIS WAS AN HONEST COMPANY

My Problem with them is that I cannot for the life of me begin to see that any Direcotr of a spreadbet company is going to deliberately 1. mix company funds with client money knowing the seriousness of such an FSA required issue. It just beggars belief.. I mean where are they running to? lol

 

[Paulds11]

Dear competitor,



Our No Dealing Desk forex execution presents a clear alternative to what traders traditionally had access to, and NDD eliminates the conflict of interest that exists between the broker and trader when the broker is making the market.

With NDD forex execution, 10+ liquidity providers stream prices to FXCM and our traders see the best bid/ask spread on the platform with FXCM's mark-up (or commission if you prefer). A dealing desk broker or market maker has complete control to set pricing regardless of what their bank relationships may be offering. When you place a trade with FXCM's NDD forex execution, the order is automatically offset one for one with one of the 10+ liquidity providers. A dealing desk broker or market maker is taking the opposite side of your transaction and can trade against clients if they choose not to offset the transaction. This presents the scenario where the broker can profit from traders losses or lose if the trader profits. The financial stability of the broker can depend on how well the broker's dealers are managing that risk. If the broker mismanages the risk, then the financial stability of the broker comes into question.

Regarding slippage, both positive and negative slippage is possible with FXCM, but slippage is determined by available liquidity from the 10+ liquidity providers and not by FXCM. A dealing desk broker or market maker decides the slippage you receive on any trades and can use re-quotes as a tool to enforce slippage. Just ask yourself this:
While forex transactions with FXCM are executed via NDD, FXCM does make the market for CFD transactions for oil, gold, silver, and stock indices. It was our original intention when launching CFDs a few years ago to make them NDD, but the transaction size requested by our traders was less than the minimum transaction size offered on exchange for the underlying product. It is also why we offer CFD trading in large liquid products where risk can be managed appropriately through the underlying, and not in hundreds of possibly illiquid cfd's that could result in a significant risk for both ourselves and our clients. There may come a point in the future when they will be NDD, and we look forward to that day. Regardless, our CFD products have no re-quotes or dealer confirmation. I know that spreads for some traders are the only factor they focus on when trading, but if that were the only factor everyone focused on then WorldSpreads probably would have had more clients than FXCM.

Jason

Very informative, thank you for this transparency. I think Market making in CFDs and FX is on its way out, Traders dont like it. IG have improved their games for the trader but its still galling to know thier best interest is not aligned with the traders they offer a market to. If more traders knew this, IG would not have the business it enjoys now with its user base but traders are waking up to this now, even the newbies and soon mark my words MATCHED PRINCIPLE trading (Straight through processing) will be the order of play on the day because traders are also subject to the increased risks that hedging traders off against one another brings to the Broker and thus to them.

 

[capitalspreads]

paulds11

i think you misunderstand the 'marketmaker' principal. who ever you trade with there must always be someone on the other side. Do not be blinded by companies that claim 'no dealer' on the other side when you are trading a rolling spot FX (cfd/spread bet).... unless the trade really is going to the liquidity pool provided a wide array of independent price providers via a real 'unregulated' Spot FX product platform.

it is very easy to have a seperate company be the market maker to your clients but the seperate legal entity providing the price/risk to still be a group company controlled by you. This is how a very popular FX company gets around the clients preconceptions.

LCG/Capital Spreads makes no bones about being the market making dealer on the other side of client trades but our prices come direct from our Currenex ECN platform with absolutely no price interference from our 'human' position monitors.

simon

 

[PipStar]

paulds11
i think you misunderstand the 'marketmaker' principal. who ever you trade with there must always be someone on the other side. Do not be blinded by companies that claim 'no dealer' on the other side when you are trading a rolling spot FX (cfd/spread bet).... unless the trade really is going to the liquidity pool provided a wide array of independent price providers via a real 'unregulated' Spot FX product platform.
it is very easy to have a seperate company be the market maker to your clients but the seperate legal entity providing the price/risk to still be a group company controlled by you. This is how a very popular FX company gets around the clients preconceptions.
LCG/Capital Spreads makes no bones about being the market making dealer on the other side of client trades but our prices come direct from our Currenex ECN platform with absolutely no price interference from our 'human' position monitors.
simon

I agree with what you say above Simon and since we dont agree often I thought I'd just chime in. Companies who call themselves NDD or No dealing Desk are actually just a go between to a market maker dealing desk also known as liquidity providers also known as deep pools of liquidity and also known as other fancy names except as to what they truly are. All trades eventually end up to a dealing desk. It is no more but a masquerade or in today's terms a marketing exercise to make traders think that they are trading the real market when they are not.

 

[Paulds11]

paulds11

i think you misunderstand the 'marketmaker' principal. who ever you trade with there must always be someone on the other side. Do not be blinded by companies that claim 'no dealer' on the other side when you are trading a rolling spot FX (cfd/spread bet).... unless the trade really is going to the liquidity pool provided a wide array of independent price providers via a real 'unregulated' Spot FX product platform.

it is very easy to have a seperate company be the market maker to your clients but the seperate legal entity providing the price/risk to still be a group company controlled by you. This is how a very popular FX company gets around the clients preconceptions.

LCG/Capital Spreads makes no bones about being the market making dealer on the other side of client trades but our prices come direct from our Currenex ECN platform with absolutely no price interference from our 'human' position monitors.

simon

Simon, I do NOT misunderstand the Market Maker Principle per se, although if I have not been clear apologies. You say someone on the other side? I say correct a COUNTERPARTY. What is interesting indeed is what you highlight regarding the Brokers own Counterparty in the trade linked cycle. So it appears then that unmaed FX provider is using his or his parents owned company to provide "third party" counterparty risk management route. (The scoundrels), Id have thought the FSA would be onto that "false" third party MATCHED PRINCIPLE HEDGE as a matter of course?

Thanks Simon, its interesting you use Currenex ECN platform, but that is for Forex , are you direct with the exchanges for futures and stocks?

 

[wzero]

I don't care there must always be someone on the other side, I care who is on the other side.